Truth Map Generation

The representatives of 23 industrial clusters are requested to provide their opinions on the length of each life cycle period. Almost 97% agree that the cluster life cycle should be classified into four stages: initial, developing, mature, and transformation. These four stages should take an average of 19.14 years (Table 1).

However, the development periods of each industrial sector are different, especially for the mature and transformation stages. The service cluster requires the longest life cycle length of 28 years in total. Agricultural industrial clusters need longer periods of time in the transformation stage since the members mostly apply their local wisdom to the production process, even if they invent new innovations, but they mainly rely on traditional-based production and management. This reflects that there is still plenty of room for dramatic changes in various areas such as marketing, technology, and management.

Each stage and key success performance indicators are summarised as follows:

 The initial stage of agglomeration and emergence should take an average of 2.90 years, and should be a process of searching for members to create the potential industrial cluster. The main activities and

network linkages of members should be identified, both inside and outside the clusters. Operating systems including regulations and plans for the cluster should be developed at a later stage.

Therefore, the following key performance indicators should be included for success:

 Awareness: members are interested and participate in industrial cluster activities.

 Goals: there must be a specific and clear target for cooperation of cluster members.

 Innovation: the clusters provide training, workshops, and the transfer of technology among members.

 Knowledge: members play an important role in sharing knowledge and experience, as well as the distribution of information.

 Structure: there are support activities in clusters which are driven by external organisations such as government agencies.

 Trust: the trust of members is a crucial initial factor in all further industrial development processes.

The developing stage should take an average of 4.43 years. There should be strong network linkages among major players in the cluster. Cooperation with both formal and informal institutions should occur to promote cluster activities in each region. The following key performance indicators should indicate success:

 Awareness: members should ensure that industrial clusters are beneficial to all.

 Goals: there should be a concrete target for innovative cluster development.

 Innovation: the cluster should focus on the development of innovative new products, production processes, and service.

 Knowledge: members should apply technical knowledge to cluster development.

 Structure: there are still some cluster support activities driven by external organisations such as government agencies. However, members play an increasingly important role in such activities.

 Trust: the mutual trust and cooperation of cluster members in activities have increased.

The mature stage should take an average of 6.76 years and should involve the strengthening of relationships and network linkages both inside and outside the clusters. Sustainability should also be created by establishing new businesses, join-ventures, subsidiary, etc. The following key performance indicators for success should be included:

 Awareness: members realise that industrial clusters are beneficial to their business operation.

 Goals: there are members upstream, midstream, and downstream of the cluster.

 Innovation: technological development and innovations emerge to meet the needs of industrial cluster members.

 Knowledge: members play an important role in sharing knowledge and experience, as well as the distribution of information by using efficient communication processes to improve their operation.

 Structure: members play an increasingly vital role in the development of industrial activities and cooperate with external organisations for financial provision.

 Trust: members agree to set common product standards.

The transformational stage should take an average of 5.05 years. During this stage, the industrial cluster should change in various areas such as marketing, technology, and management, shown by the following key success performance indicators:

 Awareness: members realise and recognise the importance of integration to the international cluster.

 Goals: there must be a specific and clear target for cluster innovations.

 Innovation: technologies and innovations are developed to meet market requirements.

 Knowledge: members play an important role in sharing knowledge and experience, as well as the distribution of information.

 Structure: new businesses established and developed from the existing cluster are promoted.

 Trust: cluster members specify common product standards.

Table 1 - Stages of industrial cluster development classified by industrial sectors Industrial sectors Period of development stages (years)

Initial Developing Mature Transformation Total

Agricultural 3.00 4.97 7.69 9.21 24.86

Food 3.06 5.06 8.06 6.18 22.37

Garment 3.00 5.64 9.09 2.33 20.06

Para wood and rubber products 2.88 4.50 5.50 5.00 17.88

Services 3.00 5.00 10.00 10.00 28.00

Fabricated metal products, machinery and equipment

2.30 3.56 6.89 5.56 18.35

Furniture and decorative items 2.80 3.60 4.75 4.67 15.82

All industrial sectors 2.90 4.43 6.76 5.05 19.14

Source: Author‟s own study

4.2 Determinants of success in industrial cluster development

The determinants contributing to success in each stage of the industrial cluster development life cycle can be classified clearly into two groups, namely.

In the first two stages of agglomeration and emergence, the developing key success performance indicators should consequently be: (1) awareness, (2) structure, (3) trust, (4) knowledge, (5) innovation, and (6) cluster goals. Whereas, for the mature and transformational stages, key success performance indicators should be: (1) structure, (2) innovation, (3) trust, (4) awareness, (5) knowledge, and cluster goals, respectively.

It should be realised that “structure” does not mean the organisational structure of the cluster, but represents the network linkages among the cluster members and all stakeholders, including government agencies. Besides, it covers the participation of members in making decisions on the development approach, communication systems, infrastructure, research and development, and sourcing financial funds, as well as establishing new business from the existing industrial cluster. For these reasons, representatives of most clusters provide information indicating that the process of structural development comes second in determining the success of an industrial cluster, while the first priority is creating awareness and understanding among participant members of its importance and benefits.

Guidelines for determining key performance indicators for industrial cluster development can be classified as follows. Awareness should be composed of the following indicators:

 Changes in the knowledge and understanding of cluster members before and after project participation.

 Changes in awareness and giving precedence to the project by cluster members before and after participation.

 Benefits of joining the industrial cluster both in terms of cash and in-kind.

 Determination of the cluster organisation structure, drafting of strategic and operational cluster plans.

 Monitoring and evaluation of determined indicators to improve further project development.

Goals should comprise the following indicators:

 Association with members across the industrial value chain upstream, midstream, and downstream.

 Setting principal target activities of cluster both in monetary and non-monetary terms, i.e. collective production and marketing, allocation of purchase orders, and production cost reduction.

 Development of innovative new products, production processes, and forms of service in commercial operations or expected to operate in the next stage.

 Review and adjustment of organisational structure, management, and the strategic and operational cluster plan.

 Monitoring and evaluation of determined indicators to improve further project development.

Innovation should comprise the following indicators:

 Provision of training and workshops to transfer knowledge among members within the cluster or by outside experts.

 Commercial development of innovative new products, production processes, and forms of service based on cluster needs for monetary evaluation.

 Commercial development of innovative of new products, production processes, and forms of service based on customer or market needs for monetary evaluation.

 Establishment of a centre for product quality and testing of standards.

 Establishment of a distribution centre for cluster products.

 Review and adjustment of organisational structure, management, and strategic and operational cluster plans.

 Monitoring and evaluation of determined indicators to improve further project development.

Knowledge should comprise the following indicators:

 Substantial sharing of experiences and information among members through media or various effective networks.

 Study tour to share knowledge between members inside and outside the cluster.

 Application of academic and technical knowledge in the production process, management, marketing, workforce development, etc. to evaluate both monetary and non-monetary success.

 Review and adjustment of organisational structure, management, and strategic and operational cluster plans.

 Monitoring and evaluation of determined indicators to improve further project development.

Structure should comprise the following indicators:

 Use of the Internet for coordination and communication involving the external sector.

 Steadily increasing member participation in cluster activities.

 Formulation of projects to support developments in manufacturing, marketing, management, workforce efficiency, and technological progress to acquire funds from external promotional organizations.

 Formulation of projects to support research and development for the cluster to acquire funds from external promotional organizations.

 Review and adjustment of organisational structure, management, and strategic and operational cluster plans.

 Monitoring and evaluation of determined indicators, including monetary and non-monetary, such as cost efficiency, in order to further improve project development.

Trust should comprise the following indicators:

 Steadily increasing members who continuously participate in cluster activities.

 Clear division of labour among members to perform specific tasks according to the strategic and operational plans.

 Determination of common product standards and commercial operations in line with developed procedures.

 Skills development and labour exchange within the industrial cluster.

 Collaboration in the use of machines, tools, and equipment among cluster members as necessary.

 Review and adjustment of organisational structure, management, and strategic and operational cluster plans.

 Identification of roles and duties of members, regulations, and guidelines for the development of industrial cluster activities for fair and equitable treatment of all members in accordance with social ethics.

 Monitoring and evaluation of determined indicators, including monetary and non-monetary, such as cost efficiency, in order to further improve project development.

Determination of the industrial cluster development target indicators mentioned above should be based on the DIP, and/or the industrial cluster implementing activities under the development project each year. Besides, the expected target should depend on the particular stage of industrial cluster life cycle, and/or the industrial sector. Some target indicators could therefore be generic for all clusters and some would be specific to each cluster. This means industrial clusters can be self-assessed under the plan and project framework for prior selection before implementation.